AI and Blockchain to Spark $20 Trillion Tokenization Boom, Ondo Exec Predicts

While interest in digital asset ownership (tokenization) is increasing rapidly, John Hoffman believes the real surge in demand will come from applications related to artificial intelligence.

A recent hire at Ondo Finance, formerly of Invesco and Grayscale, believes that combining blockchain technology with artificial intelligence has the potential to significantly impact how financial markets operate in the next ten years.

According to Hoffman in a recent CoinDesk interview, the future of financial markets lies within blockchain technology. He believes that artificial intelligence (AI) will soon play a direct role, with AI agents actively trading and investing in digital assets like tokenized funds.

Hoffman’s research connects to a major trend in finance – moving traditional assets like stocks, bonds, and funds onto blockchain technology. Banks, investment firms, and exchanges are exploring ‘tokenized’ versions of these assets, hoping that using blockchain will speed up processes and make markets work better.

The market for tokenized assets has grown rapidly, almost tripling in the last year to exceed $33 billion, according to RWA.xyz. Experts predict significant further growth – Citi forecasts a potential value of $5.5 trillion by 2030, and Boston Consulting Group with Ripple estimate it could reach $18.9 trillion by 2033.

Tokenization follows the ETF boom

Hoffman said he sees parallels of tokenization with the early days of exchange-traded funds (ETF).

Early on, ETFs were harshly criticized – some even called them dangerously risky, like ‘weapons of mass destruction,’ said Hoffman. This highlights how much skepticism there was about this investment structure before it grew into the popular market access tool it is today.

When he started working with ETFs in the early 2000s, the market was around $200 billion in size. Now, it’s grown to nearly $20 trillion worldwide, as reported by PwC.

He said tokenization is following a similar path, but much faster than ETFs.

He explained that when any market moves online, it tends to grow. He believes tokenization is essentially bringing capital markets into the digital world.

Building for an agent-driven future

As a crypto investor, I see tokenization as absolutely key to the future – specifically, how AI will reshape finance. It’s not just about hype; tokenization will be the building block for all the cool, AI-powered financial services we’ll see next.

As an analyst, I see a future where smart, self-operating systems will constantly watch the markets and invest money for people through portfolios that adjust automatically to changing conditions. Basically, it’s about letting AI manage investments in a dynamic way.

He explained that their goal is to create investment portfolios that are expertly handled, updated instantly, and responsive to current market conditions and new information.

For this to happen, the financial industry needs to create digital versions of assets, build systems for managing them directly on blockchains, and develop investment strategies that work seamlessly with these new technologies.

Ondo is working to achieve this goal, and is already offering digital versions of U.S. Treasury bonds. They plan to broaden their offerings to include stocks, ETFs, and perpetual futures, all through their digital marketplace.

Our goal is to be the most reliable platform for managing investments on the blockchain, using smart technology,” Hoffman explained.